Navigating growth hurdles: Challenges faced by healthcare startups

Healthtech startups have the potential to transform the healthcare sector. However, they need to navigate through the sea of hurdles to sustain and thrive.

May 19, 2025 - 06:00

Navigating growth hurdles: Challenges faced by healthcare startups

Healthtech startups often emerge as beacons of hope, when it comes to bridging health quality gaps, accessibility and affordability, for their innovative solution. But, unfortunately, only a few are able to sustain and become successful. Data reveal that 90% of startups fail in the long run and 60% within five years.

Why is it so?

Statutory obligations and other related risks

The healthcare ecosystem experiences quite a few regulations, and hence, startups have to find their way out of this compliance maze as they grow their businesses. Be it protecting and covering patients’ issues with HIPAA in the US or getting FDA approvals to market medical devices; there are several obstacles presented to startups in terms of laws.

Keeping track of regulations: Legal regulations are not static; therefore, it is important to know new regulations introduced in businesses or new practices. Legal problems should be addressed from the beginning, and compliance managers should even be recruited to ensure conformity throughout the young firm's activities.

Doing business with strong compliance management: Many elements are in place, such as policies, tools, training, and monitoring, which, if implemented, can lower legal risks. Compliance training for workers must be done to help employees understand compliance activities and issues regarding individual privacy.

Regular risk assessments: Prevention is better than cure. Every healthcare startup should embrace this proactive approach. It is more important than ever because it identifies areas of weakness that should be addressed upfront without allowing them to grow over time.

Ignoring healthcare laws can result in penalties, loss of reputation, or even shutting down a firm. Therefore, a strong compliance risk management plan is not optional.

Maintaining quality care

This challenge stands out, however, as one of the most significant pain points within healthcare startups—how to keep treating patients with just as high standards of care as before while expanding. The swift increase can lead to the squeezing of the organisation’s capabilities, making it hard not to allow the standards of patient care that most startups base their ideas on. In order not to sacrifice turnover consistency, the startups must work on the following three aspects:

Quality management and monitoring systems: Quality assurance has challenges, particularly for startups, and therefore, they incorporate extra quality control mechanisms, including audits, customer feedback, and legal compliance measures. These approaches will undoubtedly ensure a high quality of care despite the growth.

Training systems: Due to the nature and environment of work, teams in healthcare endeavours need to be constantly trained and updated about developments in medicine and best practices in the industry.

Information technology use: Implementation of EHR, telemedicine, and other technologies can also further efficiency by reducing time wasted on paperwork and increasing the speed of service provision. These tools will help deliver care and maintain quality even when business process expansion is underway.

Quality can never be considered secondary, if a company wants to survive for long in the industry!

Expanding the workforce and optimising human capital

Although the recruitment, engagement, and development of human talent are critical components in scaling any organisation, the necessity becomes even more so in healthcare. Healthcare startups frequently experience challenges in developing a sizeable workforce that aligns positively with their growth rate and workplace environment. Three strategies may help mitigate this:

Attractive salary and other benefits: It has become impossible for healthcare professionals to be jobless; this is why there are many job opportunities, and therefore, an employee needs to offer attractive compensation and other well-being provisions as well as future career advancement.

Promoting good employee relations: It has become critical that every employer works towards satisfying its employees, as this increases the chances of retaining them. In this context, however, the emphasis shall be on a positive working culture in the firm, employees able to grow up the ranks in their careers, and strong motivation among all the employees to be part of the organisation.

Technology for workforce management: Human capital management can be simplified using workforce management system software and other automated processes. This allows practitioners to concentrate on the most important aspect: taking care of the patients. For example, automating shift setup and proper communications to lift workloads off employees has been known to increase productivity positively.

Remember, the human workforce is the real resource contributing to the success story of a company!

Achieving long-term financial sustainability and acquisitions

Less than one in five patients will likely prefer a healthcare startup due to the many existing vendors in ruins. Time is indeed required since there is extreme competition in the growing healthcare market. It goes without saying, though, that generating such revenue will not be easy.

Taking advantage of other non-venture capital funds: Raising funds by other means is a necessity, as looking only for VCs will prove immensely tough, especially for entrepreneurs who do not have anything tangible yet. Its various aspects, however, enhance efficiency as they help decrease the probability of a negative cash position.

Ensuring sufficient expenditure control: A poor understanding of budget management remains a complicated problem for all stages of business development. Still, startups, by nature, are very thrifty until they achieve break-even and thus do not dispense all free cash flow into operational expenses.

Executing these financial strategies would, therefore, allow the startups to earn the required funds and avert eventual financial trouble.

Failure to adapt to change

Several factors are responsible for the growth and development of the healthcare industry. These include new technologies, changes in consumer preferences, and new markets. Healthcare startup companies will have to be nimble to respond to these changes if they want to remain in the market.

Market research: New ventures must conduct proper market research and implement it regarding what people do, how their competitors behave, and the changes in the industry. A perspective on positioning in the market makes it possible for startups to reposition themselves and look for new ways to create and capture value.

Bringing in innovations: Research and development (R&D) is one of the backbone prerequisites for all startup healthcare ventures that are willing to resort to innovative solutions. This includes, but is not limited to, new product lines such as medical equipment, software, and patient action strategies. Staying one step ahead of others is extremely beneficial.

Partnering: Healthcare organisations need to form alliances if they wish to grow their businesses to new heights through new channels, pursue new resources and markets, or gain entry into other alliances, such as technology or healthcare organisations and other new ventures. Such partnerships can also foster innovations and create new possibilities.

Adaptability and continuous innovation characterise healthcare startups and provide guidance on how to handle any changes in the market to yield desirable results in the future.

In conclusion, healthtech startups have the potential to transform the healthcare sector. However, they need to navigate through the sea of hurdles to sustain and thrive.

(Saurav Kasera is Co-founder and CEO of CLIRNET and DocTube.)

Edited by Kanishk Singh

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)